Fernandez-Lawson v. National General Insurance Company

• Court: District Court, S.D. California
• Decided: May 7, 2024
• Docket: 3:23-cv-00777
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 ANGIE FERNANDEZ-LAWSON an Case No.: 23CV777-GPC(AHG) individual, and TRENTON KEPPLE, an 12 individual, ORDER 13 Plaintiffs, (1) GRANTING IN PART AND 14 v. DENYING IN PART PLAINTIFFS’ 15 MOTION FOR PARTIAL NATIONAL GENERAL INSURANCE SUMMARY JUDGMENT; AND 16 COMPANY; and DOES 1 through 10, (2) GRANTING IN PART AND 17 Defendant. DENYING IN PART DEFENDANT’S MOTION FOR PARTIAL 18 SUMMARY JUDGMENT 19 [Dkt. Nos. 18, 19.] 20

21 Before the Court are Plaintiffs and Defendant’s motions for partial summary 22 judgment. (Dkt. Nos. 18, 19.) Oppositions and replies were filed. (Dkt. Nos. 24-27.) 23 The Court finds that the matter is appropriate for decision without oral argument pursuant 24 to Local Civ. R. 7.1(d)(1). After a careful review of the papers, the supporting 25 documentation, and the applicable law, the Court GRANTS in part and DENIES in part 26 Plaintiffs’ motion for partial summary judgment; and GRANTS in part and DENIES in 27 part Defendant’s motion for summary judgment. 28 1 Procedural Background 2 On April 27, 2023, Plaintiffs Angie Fernandez-Lawson (“Fernandez-Lawson”) and 3 Trenton Kepple (“Kepple”) (collectively “Plaintiffs”) filed an insurance bad faith 4 complaint against Defendant National General Insurance Company (“NGIC” or 5 “Defendant”) arising from injuries Fernandez-Lawson sustained from a car accident on 6 October 11, 2017 when she was struck from behind by Kepple. (Dkt. No. 1, Compl.) 7 The complaint alleges the following six causes of action: 1) by Fernandez-Lawson, as 8 assignee, for breach of the implied covenant of good faith and fair dealing; 2) by 9 Fernandez-Lawson, as assignee, for breach of contract; 3) by Fernandez-Lawson, as 10 judgment creditor, for direct action for recovery of judgment under California Insurance 11 Code section 11580; 4) by Fernandez-Lawson, as judgment creditor, for breach of the 12 implied covenant of good faith and fair dealing; 5) by Fernandez-Lawson, as judgment 13 creditor, for breach of contract; and 6) by Kepple, as an individual, for breach of the 14 implied covenant of good faith and fair dealing. (Id. ¶¶ 52-82.) 15 On March 18, 2024, Plaintiffs and Defendant filed their respective motions for 16 partial summary judgment. (Dkt. Nos. 18, 19.) Plaintiffs seek summary judgment on the 17 three claims for breach of the implied covenant of good faith and fair dealing brought by 18 Fernandez-Lawson, as assignee (first claim), and judgment creditor (fourth claim), and by 19 Kepple, as an individual (sixth claim). (Dkt. No. 18.) Defendant pursues summary 20 judgment on the same three claims for breach of the implied covenant of good faith and 21 fair dealing (first, fourth and sixth claims); the two breach of contract claims brought by 22 Fernandez-Lawson, as assignee (second claim), and as judgment creditor (fifth claim); 23 the third claim for direct action for recovery of judgment by Fernandez-Lawson, as 24 judgment creditor; and the claim for punitive damages. (Dkt. No. 19.) Oppositions and 25 replies were filed. (Dkt. Nos. 24, 25, 26, 27.) 26 Factual Background 27 NGIC issued automobile insurance policy number 2004671415 to Ray Kepple who 28 listed Plaintiff Trenton Kepple as an additional insured providing limits of $15,000 for 1 bodily injury per person. (Dkt. No. 19-4, Tuck Decl., Ex. 1.) The insurance policy 2 provides, “[NGIC] will pay damages for ‘bodily injury’ . . . for which an ‘insured’ 3 becomes legally responsible because of an auto accident. Damages include prejudgment 4 interest award against the ‘insured’. We will settle or defend, as we consider appropriate, 5 any claim or suit asking for these damages. In addition to our limit of liability, we will 6 pay all defense costs we incur. Our duty to settle or defend ends when our limit of 7 liability for this coverage has been exhausted." (Id. at 10.1) 8 A. Accident and Initial Claim Handling 9 On October 11, 2017, Fernandez-Lawson was stopped at a red light when she was 10 struck from behind by Kepple. (Dkt. No. 24-2, Pls’ Response to D’s SSUMF, No. 2.) 11 NGIC’s claim file2 indicates that on that same day, Reginald Lawson, Fernandez- 12 Lawson’s husband who was also a passenger, contacted NGIC about the accident. (Dkt. 13 No. 19-4, Tuck Decl., Ex. 2 at 140.) On October 12, 2017, Reginald Lawson reported to 14 NGIC that they were rear-ended by the insured while stopped at a red light, that 15 Fernandez-Lawson was the driver and was taken, by ambulance, to a hospital and 16 released that day with neck and back issues. (Id. at 138.) On October 13, 2017, NGIC 17 concluded that the accident was covered by the insurance policy which provided bodily 18 injury limits of $15,000 per person, that the insured was 100% at fault and Fernandez- 19 Lawson was taken to the “ER via EMS for soft tissue.” (Id. at 137.) After review of 20 pictures submitted of the accident, NGIC wrote there was “moderate damage to the hatch 21 22 23 1 Page numbers are based on the CM/ECF pagination. 2 A claim file includes “[d]ocuments, correspondence, memos, policy information, estimates, 24 photographs, and other information” to evaluate a claim and is generated and maintained by claim 25 specialists and supervisors. (Dkt. No. 19-3, Tuck Decl. ¶¶ 4-5.) Claim specialists and supervisors are trained and instructed to write down any significant information, or memorialize a pertinent 26 conversation or event, and include what the claim specialist or supervisor has done, heard or observed and entries are made at or near the time of the activity related in each entry. (Id.) The Court notes 27 NGIC’s claim file includes a lot of insurance jargon and abbreviations not fully explained by either party. While some abbreviations, jargons and abbreviated words are decipherable, others are not. The 28 1 door dented and creased on both sides indicating a center r/e hit. The paint on the rear 2 bumper appears to be chipping off from the plastic being flexed, or possibly from the age 3 of the vehicle. There appears to be some dmg to the right front bumper, fender, headlight 4 & fender.” (Id.) 5 On October 13, 2017, Fernandez-Lawson spoke with a representative of NGIC 6 stating that she was taken to urgent care at Grossmont Hospital, no x-ray or CT scans 7 were taken, after checking her neck and spine, she received a shot for the pain in her 8 shoulder and a pill. (Id. at 136.) She was diagnosed with muscular skeletal pain, 9 “cervical s/s”, and she felt like her left eyeball was going to pop. (Id.) The emergency 10 room (“ER”) doctor advised she follow up with her primary care physician (“PCP”) and 11 was prescribed ibuprofen and “cyclobenzaprine OOP”. (Id.) She paid $100 to ER and $5 12 for the prescription. (Id.) Fernandez-Lawson was told there is a $30 copay to see her 13 doctor and because she did not have any money at the time, she indicated she would wait 14 to schedule the appointment. (Id.) As to lost wages, Fernandez-Lawson informed the 15 NGIC representative that she is self-employed as a dog groomer but could not stand 16 because her left arm was tweaked and she had back pains. (Id.) Fernandez-Lawson also 17 explained to NGIC that she worked on about 2-6 dogs per day, though it varied, with fees 18 ranging from $25 (for nail trim) to $75-$100 (bath and clip), that she did not have any 19 appointments scheduled for the day of the accident but claimed she had missed three 20 appointments as of October 13, 2017 and lost $200 in wages. (Id.) The representative 21 offered her “$1,000 gens, $200 lost income plus meds up to $3,500” but she declined and 22 stated she was still in pain and wanted to see her doctor first because she felt a lot of 23 force from the impact. (Id.) She acknowledged she never heard screeching tires but felt 24 a moderate force of impact. (Id.) 25 In a letter dated October 26, 2017, Fernandez-Lawson’s counsel, Bibianne Fell 26 (“Attorney Fell”), of Gomez Trial Attorneys, informed NGIC that she represented 27 Fernandez-Lawson concerning the October 11, 2017 accident, made a formal demand for 28 the preservation of evidence, requested all insurance policies, including the declaration 1 pages which listed the policy limits, and asked NGIC to request its insured’s permission 2 to release that information as authorized by California law. (Dkt. No. 18-5, Calhoon 3 Decl., Ex. 8.) Fernandez-Lawson’s claim was handled by claims adjuster, Starla Tuck, 4 who handled claims in several states, including California, and had authority to settle up 5 to $15,000 without any additional managerial oversight. (Dkt. No. 25-1, D’s Response to 6 Pls’ SSUMF, No. 9.) 7 B. First Policy Limits Demand Dated February 9, 2018 8 On February 15, 2018, NGIC received a call as well as the first policy limits 9 demand, dated February 9, 2018, from Attorney Fell indicating that the settlement offer 10 for the policy limits would remain open until February 23, 2018. (Dkt. No. 19-3, Tuck 11 Decl. ¶ 12; Dkt. No. 18-5, Calhoon Decl., Ex. 13.) The letter was seven pages long and 12 included pictures of the damaged vehicle discussing Kepple’s full liability, explained 13 Fernandez-Lawson’s medical treatment and her continued severe pain on the left side of 14 her head, neck and radiating down her arm as well as severe burning-type pain radiating 15 into her buttock. (Dkt. No. 18-5, Calhoon Decl., Ex. 13 at 69.) The letter included 16 pictures of Fernandez-Lawson and her dog-grooming business showing her work 17 involves bending, stooping, standing and heavy-lifting. (Id. at 72.) Included also was a 18 table of medical expenses showing $4.658.16 for American Medical Response (“AMR”) 19 for the ambulance, $715.00 for Team Phys. of Northern CA Med. Group, Inc., unknown 20 costs for Sharp Premiere as well as Sharp Grossmont Hospital, and $200 in co-pays for a 21 total of $5,573.16. (Id. at 70.) The letter further explained that Fernandez-Lawson had 22 not been able to work as a dog groomer during the past four months since the accident 23 because she could not stand for more than five minutes. (Id.) It included a table showing 24 she made on average of $2,800 per month between June 2017 through August 2017, and 25 on average $1,600.00 per month in September and October 2017. (Id. at 71.) Based on 26 this, the table showed losses of $1,200 in October 2017 and $2,800 from November 27 through February 2018 for a total of $12,400. (Id.) 28 1 Attached to the first policy limits demand letter were medical records for the 2 October 11, 2017 emergency room visit to Sharp Grossmont Hospital; a October 20, 3 2017 office visit with Dr. Merritt Matthews, M.D.; three x-ray reports of Fernandez- 4 Lawson’s left shoulder, cervical spine and lumbar spine dated October 25, 2017; a 5 November 6, 2017 office visit; an invoice from American Medical Response (“AMR”), 6 the ambulance, for $4,658.163; and a receipt for a copay for the October 20, 2017 7 appointment but with no dollar amount indicated. (Dkt. No. 18-5, Calhoon Decl., Ex. 8 13.) 9 The ER notes of October 11, 2017, the day of the accident, indicated that 10 Fernandez-Lawson complained of lateral left neck pain that radiates down the left arm, 11 left lower back pain and left buttock pain radiating down her left leg and describing her 12 pain as an 8/10 constant “heat type” pain. (Id. at 76.) Pain is aggravated with movement 13 and Fernandez-Lawson also had some tingling sensation to the left foot, in her fingers 14 and a mild headache. (Id.) She was given Toradol and Flexeril. (Id. at 77.) Her 15 condition improved prior to discharge and it was recommended she follow-up with her 16 primary care physician in 2-3 days for re-evaluation and she was informed that she may 17 need physical therapy in the near future to help with her aches and pains. (Id.) The notes 18 also stated that there are no “red flags to warrant admission for emergent MRI; patient is 19 deemed stable for outpatient management.” (Id. at 78.) The Impression listed was 20 headache, neck pain, left lower back pain and left leg pain. (Id.) On discharge, she was 21 prescribed Flexeril for pain management and a prescription for ibuprofen. (Id.) 22 On October 20, 2018, nine days after the accident, Fernandez-Lawson saw her 23 PCP, Dr. Merritt Matthews (“Dr. Matthews”), who assessed her with cervical strain, 24

25 26 3 The Court notes that the NGIC claim file incorrectly lists the AMR ambulance bill as $4,568.16 instead of $4,658.16, the actual invoice amount. It appears that Attorney Fell wrote the incorrect 27 amount in her demand letter although the invoice, with the amount of $4,658.16, was attached. (Dkt. No. 18-5, Calhoon Decl., Ex. 13 at 70.) Despite the typographical error, the Court relies on the actual 28 1 acute; lumbar strain; strain of left shoulder and grade 1 concussion with no loss of 2 consciousness. (Id. at 80.) Her chief complaint was neck/lower back pain and left 3 shoulder pain. (Id.) On physical examination, Dr. Matthews noted reduced range of head 4 and neck particularly decreased range of motion of the neck in left rotation and flexion. 5 (Id. at 81.) He prescribed x-rays, and on October 25, 2018, x-rays were conducted of her 6 shoulder, lumbar and cervical spine. (Id. at 82-94.) The shoulder x-ray revealed no 7 fracture or abnormality of the left shoulder; the lumbar x-ray showed mild degenerative 8 disc disease at the lumbosacral junction and minimal scoliosis; and the cervical spine x- 9 ray revealed mild degenerative disc disease at C3-4. (Id. at 82-84.) On her follow up 10 visit, on November 6, 2017, Dr. Matthews diagnosed her with whiplash injury to neck; 11 lumbar strain; degenerative joint disease of cervical and lumbar spine; and cervical strain. 12 (Id. at 85.) On this visit, she complained of left and mid-occipital pain and 13 tingling/numbness to the occipital scalp. (Id.) He referred her to physical therapy for 14 whiplash and low back with a follow up in two months. (Id.) 15 Upon Tuck’s preliminary review on February 15, 2018, the claim file recited the 16 medical records from the ER notes which corroborated the report from Fernandez- 17 Lawson. (Dkt. No. 19-4, Tuck Decl., Ex. 2 at 118-19.) The claim file also included 18 “aggravators” and “mitigators.” (Id. at 119.) “Aggravators” listed were clear liability, 19 moderate impact, complaints of neck pain that radiates down left arm, back pain, left 20 buttock pain that radiates down her left leg, and struck head on headrest. (Id.) 21 “Mitigators” included soft tissue injuries, no fractures/dislocations, negative x-rays, mild 22 degenerative disc disease at the lumbar and cervical spine and only four days of treatment 23 records. (Id.) Next step was to call the attorney if there are additional medical records as 24 there was only 4 days of treatment and wage loss documentation. (Id.) Tuck wrote 25 “Proactive follow ups” and “Continue to move claim toward a resolution.” (Id.) 26 On the same day, February 15, 2018, Tuck left a message with Attorney Fell’s 27 office seeking additional medical bills. (Id. at 118.) Not having heard from Attorney 28 Fell, on February 21, 2018, Tuck evaluated the claim based on the February 9, 2018 first 1 policy limits demand. (Id. at 116-17.) She accepted the $4,658.16 for AMR but did not 2 accept the wage loss claim as there was no documentation. (Id. at 117.) She evaluated 3 the value of the claim to be between $5,795.00, “generals range,4” to $10,453.16, the 4 “full value range.”5 (Id. at 117.) Tuck left a voicemail and sent a letter to Attorney Fell 5 advising that NGIC had reviewed Fernandez-Lawson’s medical records and offered to 6 settle the claim for $7,570.00. (Dkt. No. 19-4, Tuck Decl., Ex. 2 at 116; Dkt. No. 18-5, 7 Calhoon Decl., Ex. 15.) In the letter, NGIC requested Fernandez-Lawson's counsel 8 contact them so they could discuss the matter further. (Dkt. No. 18-5, Calhoon Decl., Ex. 9 15.) 10 On March 5, 2018, Tuck returned a call she received from Attorney Fell on the 11 same day and left a voicemail. (Dkt. No. 19-4, Tuck Decl., Ex. 2 at 116.) On March 6, 12 2018, Tuck followed up again about the offer with Attorney Fell and left a message with 13 her assistant. (Id. at 115-16.) On March 20, 2018, Attorney Fell returned the call and she 14 and Tuck discussed the issues. (Id. at 115.) When Attorney Fell asked Tuck to disclose 15 the policy limits, Tuck advised that she did not have consent. (Dkt. No. 19-4, Tuck 16 Decl., Ex. 2 at 115; Dkt. No. 18-3, Fell Decl. ¶ 6.) Without knowing the policy limits, 17 Attorney Fell explained that Fernandez-Lawson was continuing to experience 18 radiculopathy in her upper and lower extremities and was in a significant amount of pain 19 which has been ongoing since the accident. (Dkt. No. 18-3, Fell Decl. ¶ 6.) She told 20 Tuck she strongly believed that Fernandez-Lawson suffered an injury to the discs in her 21 spine and additional care, starting with physical therapy, would be required. (Id.) 22

23 4 In their briefs, neither party has defined or explained “generals range” but the Court gleans that 24 “generals” means “general damages” which is also known as pain and suffering. (Dkt. No. 24-3, 25 Calhoon Decl., Ex. 57, Tuck Depo. at 77:15-17.) 5 Bradley Gibbs, NGIC’s regional claims manager, testified that “full value range” is the high end of a 26 settlement range. (Dkt. No. 25-5, Martin Decl., Ex. 29, Gibbs Depo. at 135:4-13.) However, Plaintiffs disagree maintaining that the full value range was not a settlement range but the potential judgment 27 Kepple was exposed because the full range is simply the sum of the accepted medical special damages plus NGIC’s assessment of the full value of the general damages. (Dkt. No. 27 at 4-5.) While this fact 28 1 Attorney Fell also informed Tuck that an MRI would be needed to identify the cause of 2 the symptoms. (Id.) Attorney Fell further explained that Fernandez-Lawson needed 3 more treatment but could not afford the copays since she was not working and Attorney 4 Fell did not want to send her for more treatment if it would exhaust the limits. (Id.; Dkt. 5 No. 19-4, Tuck Decl., Ex. 2 at 115.) Attorney Fell informed Tuck that MRIs cost several 6 thousand dollars and if the case did not settle she would have to resort to lien treatment 7 and unnecessarily erode any settlement funds needed to pay for treatment. (Dkt. No. 18- 8 3, Fell Decl. ¶ 6.) Tuck advised counsel that if NGIC had documentation to support the 9 full amount of wage loss, there may be a limits issue. (Dkt. No. 19-4, Tuck Decl., Ex. 2 10 at 115; Dkt. No. 18-3, Fell Decl. ¶ 7.) When Attorney Fell asked what would be needed 11 to accept the wage loss claim, Tuck asked for three years of prior tax returns. (Dkt. No. 12 18-3, Fell Decl. ¶ 7; Dkt. No. 19-4, Tuck Decl., Ex. 2 at 115.) In her notes, Tuck wrote it 13 appears that Fernandez-Lawson plans to seek additional treatment. (Dkt. No. 19-4, Tuck 14 Decl., Ex. 2 at 115.) 15 C. Second Policy Limits Demand Dated April 4, 2018 16 In a letter dated April 4, 2018, Attorney Fell sent a second policy limits demand 17 with forty-eight (48) pages of additional medical and billing records to NGIC with a 18 deadline to respond by April 12, 2018.6 (Id. at 114; Dkt. No. 18-5, Calhoon Decl., Ex. 19 19; Dkt. No. 18-3, Fell Decl. ¶ 9.) The second policy limits demand included six CVS 20 pharmacy receipts (ranging from $3.76 to $20 and totaling $68.22 but they did not 21 identify what the amounts were for and some did not have the dates of purchase), an 22 emergency room bill for $2,064.90, and $30-$40 co-payments totaling $210. (Dkt. No. 23 18-5, Calhoon Decl., Ex. 19; Dkt. No. 19-4, Tuck Decl., Ex. 2 at 113-14.) It also 24 included an order by Dr. Matthews for a CT scan of the brain with/without contrast dated 25 26 27 6 The submission also included duplicative x-ray reports taken October 25, 2017, the November 6, 2017 follow up visit with Dr. Matthews as well as the AMR invoice that had already been submitted with the 28 1 March 26, 2018 for chronic headaches. (Dkt. No. 18-5, Calhoon Decl., Ex. 19 at 182.) 2 The second policy limits demand also attached two separate physical therapy 3 assessments, on March 22, 2018, evaluating the lumbar spine and sacroiliac, and 4 cervical/thoracic spine. (Id. at 187-94.) 5 On April 6, 2018, after review of the additional documentation, in addition to what 6 was evaluated before, Tuck added the PT evaluations as a “mitigator” stating that 7 Fernandez-Lawson started PT five months after the accident and the treatment began 8 after the initial offer was made indicating three visits began in March 2018. (Dkt. No. 9 19-4, Tuck Decl., Ex. 2 at 113.) Tuck also accepted the additional medical bills and 10 increased the amount of damages supported by the ER invoice and the co-pays for a total 11 of $6,843.06. (Id.) As to wage loss, Tuck noted that no documentation had been 12 provided to support the $12,400 but recognized that she lost $200 for missing 3 13 appointments. (Id.) After review, Tuck revised the value of the claim from $6,795.00, 14 “generals range” up to $13,638.06, the “full value range.” (Id.) On the same day, Tuck 15 sent a response indicating she has been trying to contact them about Fernandez-Lawson, 16 reviewed the additional medical records and offered $9,900.00 to settle the case and 17 asked counsel call to discuss it further. (Dkt. No. 18-5, Calhoon Decl., Ex. 21; Dkt. No. 18 19-4, Tuck Decl., Ex. 2 at 113; Dkt. No. 18-3, Fell Decl. ¶ 10; Dkt. No. 19-3, Tuck Decl. 19 ¶ 19.) 20 Within a day of NGIC’s response, Attorney Fell called Tuck asking why the policy 21 limits demand was rejected because while she did not know the policy limit, she gathered 22 it was small. (Dkt. No. 18-3, Fell Decl. ¶ 11.) In response, Tuck stated she needed the 23 tax returns for the prior three years to analyze the wage loss portion. (Id.) Attorney Fell 24 told Tuck that the records had been requested and would be sending them soon. (Id.) 25 D. Third Policy Limits Demand Dated April 9, 2018 26 On April 9, 2018, Attorney Fell sent a third policy limits demand to NGIC 27 providing Fernandez-Lawson's tax returns from 2014-2016 to support of her wage loss, 28 reiterated that Fernandez-Lawson continues to have severe low back pain, continues to 1 treat and continues to be unable to work resulting in significant lost income, and 2 demanded policy limits with an expiration date of April 13, 2018. (Dkt. No. 18-6, 3 Calhoon Decl., Ex. 24.) Attorney Fell also informed that Fernandez-Lawson has had 4 financial difficulty paying her copays due to the lost income. (Id.) The attached tax 5 returns showed that in 2014, Fernandez-Lawson’s grooming business grossed 6 $17,425.00; in 2015, it grossed $11,525.00; and in 2016, it grossed $9,355.00. (Id.) 7 On April 11, 2018, Tuck indicated she received additional records and evaluated 8 them. (Dkt. No. 19-4, Tuck Decl., Ex. 2 at 112.) Tuck noted that Fernandez-Lawson had 9 more physical therapy visits in March and April 2018, with the last reported visit on April 10 3, 2018. (Id.) She noted that the PT records were “highly inconsistent” as to Fernandez- 11 Lawson’s reports on the location of her position of comfort and “would routinely 12 change[s] answers.” (Id.) Tuck stated that Fernandez-Lawson reported “lingering 13 headaches, occasional blurred vision and light sensitivity, occasional mild confusion and 14 sleep disturbance.” (Id.) She had an eye appointment on February 13, 2018 but no 15 record was provided. (Id.) The total medical bills accepted remained the same at 16 $6,843.06, the wage loss claim of $12,400 was not accepted because no documentation 17 was provided although the claim file acknowledges lost income of $200 for missing three 18 dog grooming appointments. (Id.) Based on this, Tuck updated the value of the claim 19 due to “lingering issues” from $7,753.00, “generals range” up to $14,596.06, the “full 20 value range”, and offered $11,800.00 and invited counsel to discuss the claim further. 21 (Id.; Dkt. No. 18-6, Calhoon Decl., Ex. 25.) 22 In a letter dated April 12, 2018, Attorney Fell rejected the $11,800.00 counteroffer 23 to settle explaining that Fernandez-Lawson’s injuries exceed the offer as she cannot work 24 due to radicular symptoms and pain, and she is constrained from seeking medical 25 treatment for financial reasons. (Dkt. No. 18-6, Calhoon Decl., Ex. 27; Dkt. No. 19-4, 26 Tuck Decl., Ex. 2 at 111.) Attorney Fell indicated Fernandez-Lawson will proceed with 27 litigation “unhindered” by the insured’s policy limits. (Dkt. No. 18-6, Calhoon Decl., Ex. 28 27.) 1 E. Post-Policy Limits Demand Medical Care 2 On May 1, 2018, Fernandez-Lawson saw Dr. Sanjay Ghosh, M.D., a board 3 certified neurosurgeon, who ordered x-rays and MRIs of the cervical and lumbar spine 4 costing $5,850.00. (Dkt. No. 18-6, Calhoon Decl., Ex. 32.) She also underwent an 5 epidural injection on June 19, 2018. (Id., Ex. 33.) On August 28, 2018, Fernandez- 6 Lawson underwent an anterior cervical discectomy with anthrodesis at C5-6, and an 7 anterior cervical discectomy with anthrodesis at C6-7. (Id., Ex. 35.) On April 8, 2019, 8 she underwent surgery for diagnostic hip anthroscopy, synovectomy, acetabulosplasty, 9 labral repair, Psoas tendon lengthening, femoraplasty, and capsulorrhaphy. (Id., Ex. 36.) 10 On May 22, 2019, she underwent additional surgery on the L5-S1 area of her spine, 11 including spinal fixation. (Id., Ex. 37.) She also underwent right carpal tunnel release. 12 (Dkt. No. 19-4, Tuck Decl., Ex. 15.) 13 F. Underlying State Court Action by Fernandez-Lawson against Kepple 14 On May 31, 2018, Fernandez- Lawson filed a complaint against Kepple in San 15 Diego Superior Court, Case No. 37-2018-00026790, for bodily injury due to negligence. 16 (Dkt. No. 24-2, Pls’ Response to D’s SSUMF, No. 39.) On June 26, 2018, NGIC was 17 advised Kepple was served with the complaint. (Id., No. 40.) On the same day, NGIC 18 offered to settle for Kepple’s policy limits of $15,000 “after review [of Fenandez- 19 Lawson’s] medical records.” (Dkt. No. 18-6, Calhoon Decl., Ex. 38.) On July 3, 2018, 20 Fernandez- Lawson rejected NGIC's offer to settle for policy limits. (Id., Ex. 39.) 21 NGIC retained counsel to defend Kepple in the litigation filed by Fernandez- 22 Lawson. (Dkt. No. 24-2, Pls’ Response to D’s SSUMF, No. 44.) On July 13, 2020, 23 Kepple assigned his rights against NGIC to Fernandez-Lawson in exchange for not being 24 sued by Fernandez-Lawson in seeking satisfaction of any judgment against him. (Dkt. 25 No. 19-4, Martin Decl., Ex. 19.) In April 2022, the case was tried and the verdict was in 26 favor of Fernandez-Lawson. (Dkt. No. 19-3, Tuck Decl. ¶ 30.) In May 2022, NGIC 27 issued payment of $15,000 to Fernandez-Lawson for the policy limits toward the 28 judgment. (Id.) On June 13, 2022, judgment was entered in favor of Fernandez-Lawson 1 in the amount of $1.5 million against Kepple. (Id., No. 49.) Later, on December 20, 2 2022, an amended judgment was filed to include costs in the amount of $814,054 for a 3 final judgment of $2,314,054. (Dkt. No. 18-6, Calhoon Decl., Ex. 56; Dkt. No. 19-4, 4 Martin Decl., Ex. 22.) 5 Discussion 6 A. Legal Standard on Motion for Summary Judgment 7 Federal Rule of Civil Procedure (“Rule”) 56 empowers the Court to enter summary 8 judgment on factually unsupported claims or defenses, and thereby “secure the just, 9 speedy and inexpensive determination of every action.” Celotex Corp. v. Catrett, 477 10 U.S. 317, 325, 327 (1986). Summary judgment is appropriate if the “pleadings, 11 depositions, answers to interrogatories, and admissions on file, together with the 12 affidavits, if any, show that there is no genuine issue as to any material fact and that the 13 moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). A fact is 14 material when it affects the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 15 U.S. 242, 248 (1986). 16 The moving party bears the initial burden of demonstrating the absence of any 17 genuine issues of material fact. Celotex Corp., 477 U.S. at 323. The moving party can 18 satisfy its burden in two ways: (1) by presenting evidence that negates an essential 19 element of the nonmoving party's case or (2) by demonstrating that the nonmoving party 20 failed to make a showing sufficient to establish an element essential to that party's case 21 on which that party will bear the burden of proof at trial. Id. at 322–23. Summary 22 judgment is warranted when a party “fails to make a showing sufficient to establish the 23 existence of an element essential to that party's case, and on which that party will bear the 24 burden of proof at trial.” Id. at 322. In such a case, “there can be ‘no genuine issue as to 25 any material fact,’ since a complete failure of proof concerning an essential element of 26 the nonmoving party's case necessarily renders all other facts immaterial.” Id. at 323. 27 If the moving party fails to bear the initial burden, summary judgment must be denied 28 and the court need not consider the nonmoving party’s evidence. Adickes v. S.H. Kress & 1 Co., 398 U.S. 144, 159-60 (1970). A “party cannot manufacture a genuine issue of 2 material fact merely by making assertions in its legal memoranda.” S.A. Empresa de 3 Viacao Aerea Rio Grandense v. Walter Kidde & Co., Inc., 690 F.2d 1235, 1238 (9th Cir. 4 1982) (citations omitted). 5 Once the moving party has satisfied this burden, the nonmoving party cannot rest 6 on the mere allegations or denials of his pleading, but must “go beyond the pleadings and 7 by her own affidavits, or by the ‘depositions, answers to interrogatories, and admissions 8 on file’ designate ‘specific facts showing that there is a genuine issue for trial.’” Celotex, 9 477 U.S. at 324. If the non-moving party fails to make a sufficient showing of an 10 element of its case, the moving party is entitled to judgment as a matter of law. Id. at 11 325. “Where the record taken as a whole could not lead a rational trier of fact to find for 12 the nonmoving party, there is no ‘genuine issue for trial.’” Matsushita Elec. Indus. Co. v. 13 Zenith Radio Corp., 475 U.S. 574, 587 (1986). In making this determination, the court 14 must “view[] the evidence in the light most favorable to the nonmoving party.” Fontana 15 v. Haskin, 262 F.3d 871, 876 (9th Cir. 2001). The Court does not engage in credibility 16 determinations, weighing of evidence, or drawing of legitimate inferences from the facts; 17 these functions are for the trier of fact. Anderson, 477 U.S. at 255. 18 B. Breach of the Implied Covenant of Good Faith and Fair Dealing-First, Fourth 19 and Sixth Claims 20 Defendant seeks summary judgment on the first, (Fernandez-Lawson as assignee), 21 fourth, (Fernandez-Lawson as judgment creditor), and sixth, (Kepple, as an individual)7, 22 claims for breach of the implied covenant of good faith and fair dealing arguing there are 23 no triable issues of facts showing that its conduct in evaluating the pre-litigation 24

25 26 7 The Court assumes that Kepple’s claim is based on his unassignable claim for punitive damages, see Murphy v. Allstate Ins. Co., 17 Cal. 3d 937, 942 (1976) (tort damages for emotional distress and punitive 27 damages are not assignable as they are purely personal tort claims), because Kepple assigned his rights to seek damages against NGIC for, among others, failure to settle and failure to investigate, to 28 1 settlement demand was reasonable and is not liable for amounts exceeding the policy 2 limits. (Dkt. No. 19.) Conversely, Plaintiffs move for summary judgment claiming 3 NGIC breached the covenant of good faith and fair dealing when it failed to accept 4 Fernandez-Lawson’s repeated attempts to settle for the $15,000 policy limits and is liable 5 for the full judgment imposed against Kepple in the state court action for negligence.8 6 (Dkt. No. 18-1.) 7 Because this case is in federal court on the basis of diversity of citizenship, 28 8 U.S.C. § 1332, California law applies. See Gibbs v. State Farm Mut. Ins. Co., 544 F.2d 9 423, 426 (9th Cir. 1976) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)). As a 10 threshold matter, neither party addresses the legal bases for Fernandez-Lawson to pursue 11 her claims for breach of implied covenant of good faith and fair dealing as an assignee 12 and as judgment creditor but instead conflates them. Caselaw on the breach of the 13 implied covenant of good faith and fair dealing makes it apparent that actions for 14 damages “in excess of the policy limits based on an insurer’s failure to settle is 15 assignable” regardless whether assignments are permitted by the policy. Comunale v. 16 Traders & Gen. Ins. Co., 50 Cal. 2d 654, 661 (1958); Johansen v. Cal. State Auto. Ass’n 17 Inter-Ins. Bureau, 15 Cal. 3d 9, 14 (1975) (claim for failure to accept a reasonable 18 settlement offer within policy limits is assignable and court’s inquiry should focus on the 19 relationship between the insurer and the insured); Hamilton v. Maryland Casualty Co., 20 27 Cal. 4th 718, 725, 732 (2002) (insured, to protect himself from an excess judgment, 21

22 8 In their motion, Plaintiffs do not specifically articulate which causes of action they are seeking 23 summary judgment on; rather they argue the “bad faith” claims should be dismissed. (Dkt. No. 18-1.) Presumably, they seek summary judgment on the first, fourth and sixth claims. Moreover, in seeking 24 summary judgment Plaintiffs rely on Judicial Council of California Jury Instruction No. 2334 (Refusal 25 to Accept Reasonable Settlement Demand Within Liability Policy Limits-Essential Factual Elements) as the legal standard governing the breach of the covenant of good faith and fair dealing claims. (Dkt. No. 26 18-1 at 17-18.) But, jury instructions cannot be used as legal authority or to establish legal propositions. See People v. Morales, 25 Cal. 4th 34, 48, n.7 (2001) (“we caution that jury instructions, whether 27 published or not, are not themselves the law, and are not authority to establish legal propositions or precedent. They should not be cited as authority for legal principles in appellate opinions.”). Here, the 28 1 can assign to the claimant his cause of action for bad faith refusal to settle in exchange 2 for a covenant not to enforce the judgment against the insured’s personal assets). While 3 the cause of action for breach of the implied covenant of good faith and fair dealing is 4 assignable, tort damages for emotional distress and punitive damages are not assignable 5 as they are purely personal tort claims. Murphy v. Allstate Ins. Co., 17 Cal. 3d 937, 942 6 (1976). Therefore, Fernandez Lawson, as assignee, and Kepple, as an individual, may 7 bring their claims for breach of the implied covenant of good faith and fair dealing. 8 However, less apparent is whether Fernandez-Lawson can proceed as a judgment 9 creditor in this case under California Insurance Code section 11580(b)(2).9 Therefore, 10 because the parties have not addressed the legal basis for her to proceed as a judgment 11 creditor, the Court also declines to address it. As such, the Court DENIES Plaintiffs and 12 Defendant’s motions for summary judgment on the breach of the implied duty of good 13 faith and fair dealing by Fernandez-Lawson as judgment creditor. 14 1. Legal Standard on Breach of the Implied Duty of Good Faith and Fair 15 Dealing 16 In California, “there is an implied covenant of good faith and fair dealing in every 17 contract that neither party will do anything which will injure the right of the other to 18 receive the benefits of the agreement,” and this principle is “applicable to policies of 19 insurance.” Comunale, 50 Cal. 2d at 658. This includes, among other things, an 20 insurer’s duty to accept a reasonable settlement offer. See Johansen, 15 Cal. 3d at 14-15 21 (citing Comunale, 50 Cal. 2d at 659); Crisci v. Sec. Ins. Co. of New Haven, Conn., 66 22 Cal. 2d 425, 430 (1967) (“duty to accept reasonable settlements” is implied in the 23 covenant of good faith and fair dealing). 24

25 26 9 California Insurance Code § 11580 provides that every liability insurance policy issued in California must include “[a] provision that whenever judgment is secured against the insured . . . in an action based 27 upon bodily injury, death, or property damage, then an action may be brought against the insurer on the policy and subject to its terms and limitations, by such judgment creditor to recover on the judgment.” 28 1 A breach of the implied duty to settle claims has two elements. Graciano v. 2 Mercury Gen. Corp., 231 Cal. App. 4th 414, 425-26 (2014). First, the third party must 3 have “made a reasonable offer to settle the claims against the insured for an amount 4 within the policy limits.”10 Id. at 425. Second, the insurer must have “unreasonably 5 failed to accept an otherwise reasonable offer within the time specified by the third party 6 for acceptance.” Id. at 426. In this case, only the second element, whether NGIC failed 7 to accept a reasonable offer, is disputed.11 8 Under California law, “[t]he implied covenant of good faith and fair dealing 9 imposes a duty on the insurer to settle a claim against its insured within policy limits 10 whenever there is a substantial likelihood of a recovery in excess of those limits.” 11 Johansen, 15 Cal. 3d at 14-15 (citing Comunale, 50 Cal. 2d at 658); Comunale, 50 Cal. 12 2d at 659 (“When there is great risk of a recovery beyond the policy limits so that the 13 most reasonable manner of disposing of the claim is a settlement which can be made 14 within those limits, a consideration in good faith of the insured’s interest requires the 15 insurer to settle the claim.”). The “only permissible” inquiry on whether an insurer’s 16 rejection of a settlement offer is “reasonable” is “whether, in light of the victim’s injuries 17 and the probable liability of the insured, the ultimate judgment is likely to exceed the 18 amount of the settlement offer.” Johansen, 15 Cal. 3d at 16. “Such factors as the limits 19 imposed by the policy, a desire to reduce the amount of future settlements, or a belief that 20 the policy does not provide coverage, should not affect a decision as to whether the 21 settlement offer in question is a reasonable one.” Id. 22 23 24 10 The first element is satisfied if “(1) its terms are clear enough to have created an enforceable contract 25 resolving all claims had it been accepted by the insurer, [ ] (2) all of the third party claimants have joined in the demand [ ], (3) it provides for a complete release of all insureds [ ], and (4) the time 26 provided for acceptance did not deprive the insurer of an adequate opportunity to investigate and evaluate its insured's exposure. [ ]” Graciano, 231 Cal. App. 4th at 425. 27 11 In one sentence, Defendant opposes Plaintiffs’ argument that Fernandez-Lawson made a reasonable offer to settle but provides no meaningful argument; instead, it focuses on the reasonableness of its 28 1 The implied covenant of good faith and fair dealing also includes the duty to 2 investigate. Egan v. Mut. of Omaha Inc. Co., 24 Cal. 3d 809, 817 (1979) (an “insurer 3 may breach the covenant of good faith and fair dealing when it fails to properly 4 investigate its insured's claim.”); Frommoethelydo v. Fire Ins. Exchange, 42 Cal. 3d 208, 5 214-15 (1986) (“Among the most critical factors bearing on the insurer's good faith is the 6 adequacy of its investigation of the claim.”); Shade Food, Inc. v. Innovative Prods. Sales 7 & Mktg., Inc., 78 Cal. App. 4th 847, 879 (2000) (“Among the most critical factors 8 bearing on the insurer’s good faith is the adequacy of its investigation of the claim.”). 9 “[I]t is essential that an insurer fully inquire into possible bases that might support the 10 insured’s claim.” Egan, 24 Cal. 3d at 819; Jordan v. Allstate Ins. Co., 148 Cal. App. 4th 11 1062, 1073 (2007) (“an insurer owes a duty to its insured to investigate all of the possible 12 bases of an insured’s claim”) (emphasis in original). An insurer’s investigation is 13 unreasonable if the insurer “fails to consider, or seek to discover, evidence relevant to the 14 issues of liability and damages.” Shade Food, Inc., 78 Cal. App. 4th at 880. As such, 15 “[a]n insurance company may not ignore evidence which supports coverage. If it does 16 so, it acts unreasonably towards its insured and breaches the covenant of good faith and 17 fair dealing.” Mariscal v. Old Republic Life Ins. Co., 42 Cal. App. 4th 1617, 1624 (1996) 18 (“insurer may not just focus on those facts which justify denial of the claim” and must 19 “thoroughly investigate the circumstances”). Consequently, if the insurer did not 20 undertake an adequate investigation, “the insurer is charged with constructive notice of 21 facts that it might have learned if it had pursued the requisite investigation.” KPFF, Inc. 22 v. Cal. Union Ins. Co., 56 Cal. App. 4th 963, 973 (1997) (citations omitted). It is the 23 insurer who has the burden to investigate and seek information relevant to the claim. 24 Hughes v. Blue Cross of N. Cal., 215 Cal. App. 3d 832, 846 (1989). 25 Under this duty, the insurer “must take into account the interest of the insured and 26 give it at least as much consideration as it does to its own interest.” Comunale, 50 Cal. 27 2d at 659 (citation omitted). “This obligation requires that the insurer give the offer its 28 intelligent and informed consideration; that the insurer advise the insured of any 1 settlement offers, together with the results of its investigations; and that the insurer give 2 equal consideration to the interests of its insured.” Cain v. State Farm Mutual Auto. Ins. 3 Co., 47 Cal. App. 3d 783, 791 (1975); Walbrook Ins. Co. v. Liberty Mut. Ins. Co., 5 Cal. 4 App. 4th 1445, 1457 (1992) (quoting Martin v. Hartford Acc. & Indem. Co., 228 Cal. 5 App. 2d 178, 183 (1964) (“While negligence alone is not sufficient to constitute bad 6 faith, an insurer must make an “informed decision” and include “the duty to give 7 intelligent consideration to an offer of settlement, with reasonable investigation and a 8 decision by persons reasonably qualified to decide upon the risks involved.”)). 9 A breach of any of these obligations coupled with a refusal to settle within policy 10 limits may render an insurer liable for any judgment against its insured, including any 11 portion in excess of the policy limits.” Anguiano v. Allstate Ins. Co., 209 F.3d 1167, 12 1169 (9th Cir. 2000) (citing Cain, 47 Cal. App. 3d at 791); Comunale, 50 Cal. 2d at 660 13 (“An insurer who denies coverage does so at its own risk and although its position may 14 not have been entirely groundless, if the denial is found to be wrongful it is liable for the 15 full amount which will compensate the insured for all the detriment caused by the 16 insurer’s breach of the express and implied obligations of the contract.”); Crisci, 66 Cal. 17 2d at 430-31 (“In view of such expectation an insurer should not be permitted to further 18 its own interests by rejecting opportunities to settle within the policy limits unless it is 19 also willing to absorb losses which may result from its failure to settle.”). 20 The determination of whether an insurer’s conduct rises to the level of bad faith 21 must be determined based on the “totality of the circumstances in which the insurer’s 22 disputed actions occurred.” Walbrook Ins. Co., 5 Cal. App. 4th at1455-56 (“The relative 23 weight of these factors-which are nebulous and imprecise by their very nature-will, of 24 course, vary from case to case.”). As such, the circumstances surrounding the insurer’s 25 decision to settle are “wide-ranging” and include “motive, knowledge, experience, and 26 the ability to prophesy.” Camelot by the Bay Condominium Owners’ Ass'n, Inc. v. 27 Scottsdale Ins. Co., 27 Cal. App. 4th 33, 48 (1994) (citing Walbrook Ins. Co., 5 Cal. App. 28 4th at 1456). Further, “the reasonableness of the insurer’s decisions and actions must be 1 evaluated as of the time that they were made; the evaluation cannot fairly be made in the 2 light of subsequent events that may provide evidence of the insurer’s errors.” Chateau 3 Chamberay Homeowners Ass’n. v. Associated Int’l Ins. Co., 90 Cal. App. 4th 335, 347 4 (2001). “While an insurer’s conduct need not rise to the level of actual dishonesty, fraud, 5 or concealment to constitute bad faith, an insurer’s conduct must nevertheless be 6 prompted not by an honest mistake, bad judgment or negligence but rather by a conscious 7 and deliberate act.” McGranahan v. GEICO Indem. Co. --F. Supp. 3d--, 2024 WL 8 413461, at *6 (C.D. Cal. Jan. 31, 2024) (citing McDaniel v. Gov't Emps. Ins. Co., 681 9 Fed. App’x 614, 615-16 (9th Cir. 2017) (internal quotation marks and citation omitted)). 10 “[T]he reasonableness of a rejected settlement offer is often an issue of fact to be 11 determined by the jury.” Samson v. Transamerica Ins. Co., 30 Cal. 3d 220, 243 (1981) 12 (citations omitted). However, “[t]he question becomes one of law only when, because 13 there are no conflicting inferences, reasonable minds could not differ.” Walbrook Ins. 14 Co., 5 Cal. App. 4th at 1454-55 (citations omitted). 15 2. Whether Considering the Totality of the Circumstances, NGIC 16 Unreasonably Failed to Accept Fernandez-Lawson’s Settlement Offer for Policy 17 Limits 18 The facts in this case are largely undisputed. The parties recognize there were 19 three separate policy limits settlement demands by Fernandez-Lawson but the ultimate 20 question is whether, as of April 9, 2018, when the third policy limits demand was sent, 21 NGIC unreasonably rejected Fernandez-Lawson’s offer to settle for the $15,000 policy 22 limit. 23 Defendant argues it was not required to accept a settlement offer based on the 24 “possibility” of a judgment exceeding policy limits. (Dkt. No. 25 at 17-18.) Plaintiffs 25 maintain that the documents presented to NGIC, as of April 9, 2018, showed it was likely 26 that a judgment against Kepple would exceed the $15,000 policy limit. (Dkt. No. 18-1.) 27 Within two days of the accident, NGIC acknowledged that there was coverage and 28 Kepple was 100% at fault so the question, pending before the Court, is whether 1 considering Fernandez-Law’s injuries at the time of the April 9, 2018 settlement offer, a 2 judgment against Kepple would likely exceed $15,000. See Johansen, 15 Cal. 3d at 16 3 (“in light of the victim’s injuries and the probable liability of the insured, the ultimate 4 judgment is likely to exceed the amount of the settlement offer”). 5 a. Past and Future Medical Expenses 6 It is not disputed that the calculation of past and future medical expenses are 7 considered as part of damages to bodily injury under the policy. In assessing a claim for 8 future medical expenses, Bradley Gibbs, NGIC’s regional claims manager, testified that 9 NGIC takes into consideration future medical treatment if necessary and medically 10 supported, but will not take into consideration “wild assumptions” that “every claim is 11 going to take its worst possible path of injury and treatment.” (See Dkt. No. 25-5, Martin 12 Decl., Ex. 29, Gibbs Depo. at 49:15-50:5; 51:8-10.12) 13 As of April 9, 2018, NGIC accepted Fernandez-Lawson’s past medical expenses 14 which are supported by the invoices of $4,658.16 from AMR; $2,064.9013 for the ER 15 visit on October 11, 2017; and co-payments of $210.00 for a total of $6,933.06.14 (Dkt. 16 No. 18-5, Calhoon Decl., Ex. 13; id., Ex. 19.) 17 As to future medical care, while NGIC acknowledges that the medical records 18 recommended that Fernandez-Lawson undergo PT 1-2 times a week for 6-8 weeks for 19 about 16 sessions, it claims there was little likelihood that she would complete treatment 20 because she did not attend PT until March 2018, five months after the accident. (Dkt. 21 No. 19 at 19.) Moreover, even if it did consider the PT visits, the additional $640.00 in 22

23 12 Deposition page numbers are based on the page numbers on the transcript. 24 13 While the ER visit invoice charge was $2,064.90, Fernandez-Lawson was only responsible for $100. 25 NGIC has acknowledged that in assessing the damages, it includes the reasonable and customary costs, which is the amount billed, not the owed amount. (Dkt. No. 24-3, Calhoon Decl., Ex. 57, Tuck Depo. at 26 171:3-8.) 14 As noted above, NGIC’s calculation is off by $90 because the AMR invoice was incorrected listed as 27 $4,568.16 when the actual invoice was $4,658.16. Therefore, NGIC relied on a total of $6843.06 for the total amount of past medical expenses. Ultimately, the $90 difference does not affect the Court’s 28 1 co-pays based on a $40.00 co-pay would not exceed her medical bills beyond $8,000. 2 (Id. at 19-20.) Plaintiffs respond that NGIC knew Fernandez-Lawson had been referred 3 to PT, costing around $150 per visit, and also knew a CT scan had been ordered by Dr. 4 Merritt, costing around $2000.00. (Dkt. No. 24 at 21-22.) They further argue that NGIC 5 improperly uses the co-pay for its calculation, when, in fact, NGIC pays the reasonable 6 and customary rate or the amount charged for medical care. (Id. at 22.) Finally, they 7 contend NGIC failed to investigate her need for future medical care based on her medical 8 records, her reported symptoms and her attorney’s reports. (Dkt. No. 18-1 at 20-21.) 9 Based on the medical records provided to NGIC, Fernandez-Lawson’s second 10 policy limits demand included an order for a CT scan of the brain with/without contrast, 11 dated March 26, 2018. (Dkt. No. 18-5, Calhoon Decl., Ex. 19 at 182.) Yet, Tuck’s claim 12 file does not mention the CT scan order and NGIC does not explain why it was not 13 considered as a future medical expense. (See Dkt. No. 19-4, Tuck Decl., Ex. 2 at 112- 14 14.) As to the cost of medical treatment, Tuck testified that in assessing a claim, NGIC 15 includes the reasonable and customary costs, which is the billed amount, not the owed 16 amount. (Dkt. No. 24-3, Calhoon Decl., Ex. 57, Tuck Depo. at 171:3-8.) As such, the 17 record includes testimony that the reasonable and customary cost for a CT scan of the 18 brain is around $2,000.00. (Dkt. No. 18-5, Calhoon Decl., Ex. 22, Tontz Expert Report at 19 229.) 20 The second policy limits demand also included a referral to PT for “whiplash and 21 low back” from Dr. Merritt. (Dkt. No. 18-5, Calhoon Decl., Ex. 19 at 184.) Attached 22 were two separate PT evaluations, dated March 22, 2018: one for her “lumbar spine and 23 sacroiliac” and one for “cervical/thoracic” and each indicated her therapy plan was “up to 24 1-2x/week for up to 6-8 weeks.” (Dkt. No. 18-5, Calhoon Decl., Ex. 19 at 189, 193.) 25 26 27 28 1 Also included were future PT appointments showing 2 visits for each day on March 27, 2 2018 and April 3, 2018. (Id. at 183.) Again, NGIC does not provide any reason why it 3 did not include future physical therapy expenses and its reason that it did not think that 4 she would complete treatment is not supported by any evidence. The only comment 5 Tuck made regarding PT in the claim file was listing it under “mitigators” because there 6 was a gap in treatment. Tuck made no evaluation as to the cost of future expected PT 7 visits. The record includes testimony that the reasonable and customary cost of physical 8 therapy is about $150 per visit. (Dkt. No. 18-5, Calhoon Decl., Ex. 22, Tontz Expert 9 Report at 229; Dkt. No. 24-3, Calhoon Decl., Ex. 59, Gibbs Depo. at 114:6-20 (testifying 10 PT visit to be about $100-$150 per visit).) As such, assessing a minimum visit of going 11 once a week for two separate sessions for 6 weeks (12x) would be about $1,800.00. 12 Therefore, as of April 9, 2018, past and future medical costs documented in the medical 13 records totaled at least $10,733.06. 14 Further, to the extent that NGIC had questions as to why Fernandez-Lawson did 15 not seek treatment for five months, or that it was not likely she would complete 16 treatment, it had a duty to investigate. See Hughes, 215 Cal. App. 3d at 846 (insurer has 17 the burden to investigate). Tuck explained that she listed PT as a mitigating factor 18 because Fernandez-Lawson waited five months for treatment and even if you do not have 19 any money, if you are in that much pain, you get treatment. (Dkt. No. 18-5, Calhoon 20 Decl., Ex. 16, Calhoon Decl., Tuck Depo. at 241:6-17; 243:4-19.) Gibbs also testified 21 that a gap in treatment is a factor in assessing the timeline and not conclusive of anything, 22 by itself. (Dkt. No. 25-5, Martin Decl., Ex. 29, Gibbs Depo. at 101:25-103:9.) He further 23 stated that it was unusual to have someone not working and also not seeking treatment 24 and raises questions as to “What’s going on?” and “Why aren’t they treating?” and “Why 25 26 27 15 Based on the appointment times of her scheduled PT session, the Court assumes she attended back to back physical therapy sessions for her lumbar/sacroiliac issues and a separate visit for cervical/thoracic 28 1 aren’t they working?” (Id. at 127:5-128:1.) Therefore, because questions arose as to the 2 delayed PT treatment, NGIC had a duty to investigate why Fernandez-Lawson did not get 3 treatment from November 2017 to March 2018, and instead, rejected any expenses for 4 future PT visits. If appears that Tuck, when evaluating the claim, misunderstood her duty 5 to investigate and improperly placed the burden to prove the claim solely on the insured. 6 (See Dkt. No. 18-5, Ex. 16, Calhoon Decl., Tuck Depo. at 168:4-169:6 (“I just evaluate it 7 based on what they sent over to me. At the end of the day, they’re proving their claim to 8 me, so they should have supplied all the documents that was needed for me to evaluate 9 this claim.”).) 10 Based on the medical documents in NGIC’s possession as of April 9, 2018, NGIC 11 does not provide an explanation why it ignored evidence of future medical expenses of a 12 CT scan and PT visits. See Mariscal, 42 Cal. App. 4th at 1624 (insurer acts unreasonably 13 when it ignores evidence that supports coverage). The record reveals that NGIC simply 14 ignored them. Further, NGIC failed to investigate its own questions regarding 15 Fernandez-Lawson’s delay in seeking PT treatment, and instead, failed to account for any 16 future PT visits.16 Therefore, NGIC breached its implied duty of good faith and fair 17 dealing in not considering future medical expenses documented in the second policy 18 limits demand. 19 b. Past and Future Wage Loss 20 In support of its position of $0 calculation for wage loss, Defendant argues that no 21 physician indicated Fernandez-Lawson was unable to work, no records were provided 22 23 24 16 Both parties dispute whether NGIC should have known Fernandez-Lawson suffered from 25 radiculopathy or nerve root compression based on the medical records, her complaints of severe pain and her attorney’s repeated comments about the severity of her pain which she claimed was likely due to 26 nerve impingement. (See Dkt. No. 18-1 at 20-21; Dkt. No. 24 at 19-21; Dkt. No. 25 at 19-20.) The Court need not address whether Tuck understood the significance of the medical records and whether 27 reported symptoms of pain were sufficient to put NGIC on notice of a more serious condition since the Court grants summary judgment based on the failure to include certain damages in NGIC’s 28 1 such as appointment ledgers, profit-loss statements, or other documentation concerning 2 her lost wages, and the income tax forms showed decreasing business income for the 3 prior three years from 2014-16 and no documentation established her income from 4 January through October 2017. (Dkt. No. 19 at 19; Dkt. No. 25 at 14.) In response, 5 Plaintiffs maintains that NGIC was in possession of information relating to Fernandez- 6 Lawson’s dog grooming business as she told NGIC that she groomed about 3-6 dogs per 7 day and provided her rates and said she lost $200 on October 13, 2018. (Dkt. No. 18-1 at 8 21-23; Dkt. No. 24 at 23-24.) Moreover, NGIC was aware that she had not worked for 9 six months since the accident, had her tax returns but failed to include any wage loss, past 10 or future. (Dkt. No. 18-1 at 21-23; Dkt. No. 24 at 23-24.) 11 Tuck testified that the insurer has a duty to provide compensation for past and 12 future wage loss, for past and future pain and suffering as long as they are supported by 13 documentation. (Dkt. No. 24-3, Calhoon Decl., Ex. 57, Tuck Depo. at 77:11-14; 79:1-8.) 14 Gibbs similarly testified that NGIC takes into account future damages, including future 15 economic, and future pain and suffering, if it can draw those conclusions from the 16 medical records at the time. (Dkt. No. 25-5, Martin Decl., Ex. 29, Gibbs Depo. at 50:6- 17 51:7.) 18 Here, NGIC assessed $0 for wage loss indicating that there was no documentation 19 despite recognizing $200 of lost wages on October 13, 2018. (Dkt. No. 19-4, Tuck Decl., 20 Ex. 2 at 112-13.) However, NGIC knew Fernandez-Lawson had not been working since 21 the accident when Attorney Fell repeatedly informed NGIC that Fernandez-Lawson was 22 unable to work since the accident, (Dkt. No. 18-5, Calhoon Decl., Ex. 13 at 17; Dkt. No. 23 18-6, Calhoon Decl., Ex. 24 at 2; id., Ex. 27 at 78), and the PT evaluations also indicated 24 that Fernandez-Lawson was off work due to her injuries. (Dkt. No. 18-5, Calhoon Decl., 25 Ex. 19 at 187, 191). 26 While NGIC does not dispute that it knew Fernandez-Lawson had not been 27 working since the accident, it maintains there was no documentation to support her wage 28 loss. NGIC argues that it never received a doctor’s note indicating that she could not 1 work and that Fernandez-Lawson did not provide any documentation such as 2 appointment ledgers or profit-loss statements; yet, NGIC never inquired about those 3 documents or investigated whether Fernandez-Lawson could or could not work. 4 Moreover, NGIC fails to explain why Tuck did not request these documents when 5 Attorney Fell asked what documentation was needed to support the wage loss in their 6 conversation of March 20, 2018. Instead, Tuck responded that she would only need three 7 years of tax returns. (Dkt. No. 19-4, Tuck Decl., Ex. 2 at 115; Dkt. No. 18-3, Fell Decl. ¶ 8 7.) In that conversation, Tuck also mentioned that if wage loss were accounted for, it 9 would raise a policy limits issue. (Dkt. No. 19-4, Tuck Decl., Ex. 2 at 115; Dkt. No. 18- 10 3, Fell Decl. ¶ 7.) 11 On April 9, 2018, NGIC received the prior three years of Fernandez-Lawson’s tax 12 returns that provided gross income specific to her dog grooming business. (Dkt. No. 18- 13 6, Calhoon Decl., Ex. 24.) Oddly, Tuck’s claim file does not mention the receipt of the 14 three years of tax returns submitted by Attorney Fell in the third policy limits demand of 15 April 9, 2018. (See Dkt. No. 19-4, Tuck Decl., Ex. 2 at 112.) Moreover, in their papers, 16 NGIC does not explain why the tax returns were never considered. While Tuck 17 acknowledged she received the tax returns, she testified she did not know why she did not 18 offer any amounts for wage loss. (Dkt. No. 18-5, Calhoon Decl., Ex. 16, Tuck Depo. at 19 261:3-16.) Instead, on April 11, 2018, in the claim file, Tuck wrote that she received 20 additional records but evaluates the PT records that had already been received in a prior 21 submission. (Dkt. No. 19-4, Tuck Decl., Ex. 2 at 112.) 22 Considering the lowest gross income in 2016 of $9,355, which amounts to $779.60 23 per month, and the six months Fernandez-Lawson had not worked from October 11, 2018 24 to April 9, 2018, her minimum estimated lost income for six months was about 25 $4,677.00. 26 Again, by assessing $0 for past and future wage loss, NGIC ignored evidence that 27 supported past wage losses and also failed to consider future wage losses. See Comunale, 28 50 Cal. 2d at 659 (in discharging this duty, the insurer “‘may not ignore evidence which 1 supports coverage.”). To the extent that NGIC had questions about her wage loss, it 2 should have investigated by asking for documentation from a physician that she is unable 3 to work and that she provide appointment ledgers and/or profit-loss statements to support 4 her lost wages. Instead, even though Tuck asked for three years of tax returns, she 5 wholly failed to consider them in her evaluation of the claim. Therefore, the Court 6 concludes that NGIC’s failure to consider any past or future wage loss in its assessment 7 was a breach of the implied covenant of good faith and fair dealing. 8 In sum, adding the $10,733.06, the minimum amount of past and future medical 9 expenses supported by the documentation, and $4,677.00, the minimum of past wage loss 10 supported by the documentation, the total amount in damages was at a minimum 11 $15,410.00, an amount above the $15,000 policy limits. Further, this amount fails to 12 consider any future wage loss, future medical care, and past and future pain and 13 suffering. (Dkt. No. 18-5, Calhoon Decl., Ex. 16, Tuck Depo. at 260:14-261:25 (Tuck 14 testified she offered $11,800 [on April 11, 2018] and that she did not assess amounts for 15 future medical care, future pain and suffering and wage loss).) 16 Therefore, as of April 9, 2018, the Court finds, as a matter of law, that only one 17 conclusion can be drawn from the evidence, that NGIC had information available to it 18 that a judgment against Kepple would likely exceed $15,000. Consequently, the Court 19 concludes that NGIC unreasonably rejected the $15,000 policy limits demand of April 9, 20 2018 and breached the covenant of good faith and fair dealing.17 See Marsango v. Auto. 21

22 17 In opposition to Plaintiffs’ motion, Defendant also argues that because there is a genuine dispute as to 23 the extent of damages based on evidence known at the time of its evaluation of the claim, it is not liable for incorrectly predicting the judgment. (Dkt. No. 265 at 25-26.) Plaintiffs disagree. (Dkt. No. 27 at 24 11.) Under the genuine dispute doctrine, “an insurer denying or delaying the payment of policy benefits 25 due to the existence of a genuine dispute with its insured as to the existence of coverage liability or the amount of the insured's coverage claim is not liable in bad faith even though it might be liable for breach 26 of contract.” Wilson v. 21st Century Ins. Co., 42 Cal. 4th 713, 723 (2007). While the doctrine originally applied to legal issues of policy interpretation, courts have applied the doctrine to factual disputes. See 27 Chateau Chamberay Homeowners Ass’n, 90 Cal. App. 4th at 348 (“we see no reason why the genuine dispute doctrine should be limited to legal issues”). “The genuine dispute rule does not relieve an 28 1 Club of S. Cal., 1 Cal. App. 3d 688, 696 (1969) (“Whether an insurers’ failure to settle 2 within the policy limits constitutes bad faith to its insured is a question of fact to be 3 determined by the jury . . . unless the evidence is such that only one conclusion may 4 reasonably be drawn from it.”). 5 c. Failure to Communicate with Kepple about Implications of the 6 Policy Limits Demand18 7 In their motion, Plaintiffs argue summary judgment should be granted on breach of 8 the duty of good faith and fair dealing because NGIC breached it duty to communicate to 9 Kepple19 concerning the implications of the policy limits demands such as the seriousness 10 or effects of a judgment against him such that he could liable for all amounts in excess of 11 the policy limits, failed to advise him of NGIC’s assessment or evaluation of the claim 12 and provide him an opportunity to contribute his own funds to effect a settlement. (Dkt. 13 No. 18-1 at 29-30.) NGIC responds that Plaintiffs’ allegations amount to negligence, not 14 bad faith, and there is nothing in the record that would have affected the potential liability 15 of an excess judgment since it properly evaluated all the evidence provided. (Dkt. No. 25 16 at 23.) 17 In evaluating a settlement offer, the insurer has a duty to not only consider its own 18 interests but must consider the interests of the insured. See Comunale, 50 Cal. 2d at 659; 19 Davy v. Pub. Nat’l Ins. Co., 181 Cal. App. 2d 387, 395 (1960) (“The decision on such a 20 matter must be based not only on the probable benefit or detriment ensuing to the insurer, 21 but also and equally upon a consideration of the probable benefit or detriment ensuing to 22 23 24 A genuine dispute exists only where the insurer's position is maintained in good faith and on reasonable 25 grounds.” Wilson, 42 Cal. 4th at 723-24. Here, to the extent the genuine dispute doctrine applies in this case, it is not applicable as NGIC did not act reasonably in assessing the claim. 26 18 This issue was only raised in Plaintiffs’ motion for summary judgment. 19 Because Ray Kepple was the named insured on the policy, the Court looks at the communications to 27 Ray Kepple and Trenton Kepple, an additional insured. Neither party has provided legal authority that the communications must be directed to solely to the driver of the vehicle covered by the insurance 28 1 the insured.”). As such, the “covenant to exercise good faith imposes upon the insurer 2 the duty to communicate to the insured the results of any investigation indicating liability 3 in excess of policy limits, and any offers of settlement which have been made, so that he 4 may take proper steps to protect his own interest.” Ivy v. Pacific Auto. Ins. Co., 156 Cal. 5 App. 2d 652, 660 (1958); Martin v. Hartford Accident & Indem. Co., 228 Cal. App. 2d 6 178, 183-84 (1964) (“Insurer had the duty to communicate to him the results of any 7 investigation indicating liability in excess of policy limits, and any offers of settlement 8 which were made, so that he might take proper steps to protect his own interest.”). 9 Ultimately, the question is whether the insured was given the opportunity to protect his 10 own interests. Davy, 181 Cal. App. 2d at 399 (“Regardless of who may have 11 communicated the information to him, [insured] was fully informed in sufficient time to 12 protect his interests.”). 13 In this case, on February 15, 2018, NGIC sent Ray Kepple, the insured, a letter 14 advising him of the first time limit demand, that it “was working to bring this matter to a 15 close”, “will address all concerns within the specified time period”, and attached a copy 16 of the demand letter. (Dkt. No. 25-5, Tuck Decl., Ex. 28; Dkt. No. 19-4, Tuck Decl., Ex. 17 2 at 118.) Then, on April 13, 2018, after Fernandez-Lawson rejected NGIC’s final 18 counteroffer, NGIC advised Ray Kepple that it was attempting to resolve the claim but “it 19 is possible that a lawsuit may be filed against you.” (Dkt. No. 18-6, Calhoon Decl., Ex. 20 29; see also Dkt. No. 19-4, Tuck Decl., Ex. 2 at 111.) It also directed him to notify NGIC 21 immediately if he is served with a complaint or any legal papers and that if a complaint 22 was filed, it would retain an attorney to represent him at no cost to Kepple. (Dkt. No. 18- 23 6, Calhoon Decl., Ex. 29.) 24 On July 6, 2018, NGIC informed Ray Kepple that the claim would likely exceed 25 the policy limits, stating “Our investigation leads us to believe that the claims for injuries 26 and/or damages could exceed the bodily injury and/or property damage limits of liability 27 under this policy. While every attempt will be made to resolve all claims against you . . . 28 please understand that [NGIC] will not be responsible for any award, judgment or verdict 1 against you in excess of the limits of liability as set forth in your policy and any such 2 excess damages will be your personal responsibility.” (Dkt. No. 18-6, Calhoon Decl., Ex. 3 40.) Further, NGIC stated that “You should also be aware that if any time during the 4 handling of the claims arising out of this matter, we advise you that we have offered the 5 full available policy limits and that any one or more claimants advises us that that is not 6 sufficient to compensate them and they are demanding more than your limits, that you 7 have the right to personally contribute money above your limits to effectuate a settlement 8 of that individual claim that is being made against you. We will let you know should this 9 situation occur.” (Id.) On December 6, 2018, NGIC sent a letter to Ray Kepple 10 indicating NGIC received the complaint and summons and reiterated the policy coverage. 11 (Dkt. No. 24-3, Calhoon Decl., Ex. 64 at 79.) Finally, on January 11, 2022, NGIC sent a 12 letter Trenton Kepple stating, “Our investigation leads us to believe that the claim for 13 damages or injuries will likely exceed the limits of liability under this policy. While 14 every attempt will be made to resolve all claims against you, please understand that 15 [NGIC] will not be responsible for any award, judgment or verdict against you in excess 16 of the limits of liability as set forth in your policy and all such excess damages will be 17 your personal responsibility.” (Dkt. No. 24-3, Calhoon Decl., Ex. 64 at 77.) “As 18 previously stated, we have offered the full available policy limits. Angie Fernandez- 19 Lawson has advised through her attorneys that same is insufficient to compensate her. As 20 she is demanding more than your limits, you have the right to personally contribute 21 money above your limits to effectuate a settlement of that individual claim which is being 22 made against you.” (Id. at 78.) 23 NGIC informed Ray Kepple of the first policy limits demand, but not the second or 24 third policy limit demands. However, the second and third policy limits demands along 25 with their attachments were crucial in providing the documentation showing that 26 Fernandez-Lawson’s potential damages would likely exceed $15,000. Only after 27 Fernandez-Lawson rejected the last counteroffer by NGIC and indicated she would 28 proceed with litigation did NGIC inform Ray Kepple, on July 6, 2018 that the claim 1 could exceed the policy limits and that he would be responsible for any award in excess 2 of the limits of liability and that he had the right to personally contribute money to 3 effectuate a settlement if the claimant sought more than the policy limits. 4 Therefore, by July 6, 2018, it was too late for Kepple “to exercise any influence 5 over [NGIC’s] decision”. See Anguiano, 209 F.3d at 1170 (reversing summary judgment 6 in favor of insurer for breach of the covenant of good faith and fair dealing for insurer’s 7 failure to inform the insured about the settlement offers) (citing Martin, 228 Cal. App. 2d 8 at 184 (“[A]n insured who is kept informed may have further information to give to the 9 carrier; he may use powers of persuasion upon the carrier to increase its offer; he may 10 engage counsel; he may have other courses of action open to him.”)). Therefore, the 11 Court finds, as a matter of law, that NGIC breached the covenant of good faith and fair 12 dealing by failing to communicate the second and third policy limits demand to Kepple. 13 In conclusion, the Court GRANTS Plaintiffs’ motion for partial summary 14 judgment on the breach of the implied duty of good faith and fair dealing by Fernandez- 15 Lawson, as assignee, and DENIES Defendant’s motion for partial summary judgment the 16 same claim by Fernandez-Lawson, as assignee. 17 C. Breach of Contract-Second and Fifth Claims 18 Defendant seeks summary judgment on the second and fifth causes of action for 19 breach of contract claim by Fernandez-Lawson, as assignee and judgment creditor, 20 arguing Plaintiffs have not identified a breach of any express provisions of the insurance 21 contract. (Dkt. No. 19 at 16-17.) In response, Plaintiffs argue that the duty of reasonable 22 settlement is a policy benefit to the insured and breach of that implied-in-law duty is a 23 breach of the insurance contract. (Dkt. No. 24 at 38.) 24 As noted above, the Court declines to address Defendant’s motion as it concerns 25 Fernandez-Lawson, as judgment creditor, for failing to address the legal basis for her to 26 proceed as a judgment creditor, and DENIES Defendant’s motion on this basis. As to 27 Fernandez-Lawson’s breach of contract claim, as assignee of Kepple, she summarily 28 alleges that Defendant breached the terms of the insurance policy by failing to provide 1 benefits owed to Fernandez-Lawson. (Dkt. No. 1, Compl. ¶¶ 60-63.) In their opposition, 2 Plaintiffs admit that the breach of contract is based on NGIC’s failure to accept a 3 reasonable settlement offer and explain they presented two alternative claims for 4 recovery. (Dkt. No. 24 at 38-39.) Because the Court has granted summary judgment in 5 favor of Plaintiff Fernandez-Lawson, as assignee, on the breach of the implied covenant 6 of good faith and fair dealing, the Court GRANTS Defendants’ motion for summary 7 judgment the breach of contract claim premised on the same claim as duplicative. See 8 e.g., Keshish v. Allstate Ins. Co., 959 F. Supp. 2d 1226, 1229 & n.5 (C.D. Cal. 2013) 9 (noting a claim for breach of the duty of good faith and fair dealing was duplicative of 10 breach of contract claim); Spradlin, 2019 WL 6481304, at *15 (granting summary 11 judgment as to breach of contract claim duplicative of bad faith claim). Accordingly, the 12 Court GRANTS Defendant’s motion for summary judgment on the second claim for 13 breach of contract. 14 D. Direct Action for Recovery-Third Claim 15 On the third claim, Defendant summarily argues, in one paragraph, that the 16 evidence, as of April 11, 2018, did not establish that it was substantially likely that 17 Fernandez-Lawson’s claim would exceed the $15,000 policy limits and did not “open” 18 the policy limits. (Dkt. No. 19 at 22-23.) Plaintiffs, similarly, respond in one sentence, 19 merely referencing its prior analysis, arguing that the claim is not subject to partial 20 summary judgment. (Dkt. No. 24 at 27.) 21 The third cause of action alleges a claim for direct action for recovery of judgment 22 by Fernandez-Lawson under California Insurance Code section 11580. (Dkt. No. 1, 23 Compl. ¶¶ 65-67.) Fernandez-Lawson, as judgment creditor of Kepple, alleges she 24 became a third-party beneficiary of the insurance policy and is entitled to recover 25 judgment from the underlying state court action plus interest under California Insurance 26 Code § 11580. (Id.) Neither party provides any analyses on California Insurance Code 27 section 11580 and its application to the facts of this case. Therefore, because Defendant 28 has not met its burden on summary judgment on this claim, the Court DENIES 1 Defendant’s motion for summary judgment the third cause of action as legally and 2 factually unsupported. 3 E. Punitive Damages 4 Finally, Defendant moves for summary judgment on the claim for punitive 5 damages arguing there is no evidence, let alone clear and convincing evidence, that 6 NGIC’s conduct constituted oppression, malice or fraud because it evaluated Fernandez- 7 Lawson’s claim, requested documents, reviewed the evidence, followed up and requested 8 additional documents. (Dkt. No. 19 at 23-25.) Plaintiffs oppose the motion arguing that, 9 at summary judgment, Plaintiff need not prove by clear and convincing evidence of 10 oppression, fraud or malice but that is an issue for the trier of fact. (Dkt. No. 24 at 34.) 11 Moreover, Plaintiffs contend that a jury could find that NGIC acted with malice or 12 oppression when it rejected the settlement demand by offering to settlement in amount 13 only $404 less than the $15,000 policy limits and intentionally misled Kepple and 14 concealed material facts from him. (Id. at 35-36.) 15 Kepple seeks punitive damages on his claim for sixth claim against NGIC for 16 breach of the implied covenant of good faith and fair dealing. (Dkt. No. 1, Compl. ¶¶ 77- 17 82.) 18 A plaintiff is entitled to punitive damages “where it is proven by clear and 19 convincing evidence that the defendant has been guilty of oppression, fraud, or malice.” 20 Cal. Civ. Code § 3294(a). Malice is defined as “conduct which is intended by the 21 defendant to cause injury to the plaintiff or despicable conduct which is carried on by the 22 defendant with a willful and conscious disregard of the rights or safety of others.” Id. § 23 3294(c)(1). Oppression “means despicable conduct that subjects a person to cruel and 24 unjust hardship in conscious disregard of that person's rights.” Id. § 3294(c)(2). “Fraud 25 means an intentional misrepresentation, deceit, or concealment of a material fact known 26 to the defendant with the intention on the part of the defendant of thereby depriving a 27 person of property or legal rights or otherwise causing injury.” Id. § 3294(c)(3). 28 1 While Plaintiffs need not demonstrate punitive damages by “clear and convincing” 2 evidence at summary judgment, “where the plaintiff's ultimate burden of proof will be by 3 clear and convincing evidence, the higher standard of proof must be taken into account in 4 ruling on a motion for summary judgment or summary adjudication, since if a plaintiff is 5 to prevail on a claim for punitive damages, it will be necessary that the evidence 6 presented meet the higher evidentiary standard.” Spinks v. Equity Residential Briarwood 7 Apartments, 171 Cal. App. 4th 1004, 1053 (2009) (citing Basich v. Allstate Ins. Co., 87 8 Cal. App. 4th 1112, 1121 (2001) (“If the plaintiff is going to prevail on a punitive 9 damages claim, he or she can only do so by establishing malice, oppression or fraud by 10 clear and convincing evidence. Thus, any evidence submitted in response to a motion for 11 summary adjudication must necessarily meet that standard.”)). 12 “Determinations related to assessment of punitive damages have traditionally been 13 left to the discretion of the jury.” Egan, 24 Cal. 3d at 821. However, summary judgment 14 on the issue of punitive damage is only proper “when no reasonable jury could find the 15 plaintiff's evidence to be clear and convincing proof of malice, fraud, or oppression.” 16 Hoch v. Allied–Signal, Inc., 24 Cal. App. 4th 48, 60-61 (1994). “To find the requisite 17 intent for an award of punitive damages, it is necessary to search beyond the facts of 18 [un]reasonable response to those adducing motive and intent. There must be substantial 19 evidence of an intent to vex, injure and annoy, a conscious disregard of plaintiff's rights, 20 before punitive damages may be awarded.” Fleming v. Safeco Ins. Co., 160 Cal. App. 3d 21 31, 45 (1984) (“bad faith on the one hand, and malice, oppression, or fraud on the other 22 hand are not equivalents, and any attempt to compare them would amount to a 23 comparison of apples and oranges.”). 24 The Court concludes that Plaintiffs have raised a genuine issue of material fact that 25 NGIC’s conduct in misleading Kepple by concealing material facts from him during the 26 policy limit demand offers could warrant punitive damages. Particularly, on April 13, 27 2018, NGIC wrote Ray Kepple that it was attempting to resolve the claim and informed 28 him a lawsuit may be filed against him. However, in viewing the evidence in the light 1 most favorable to Plaintiffs, a jury could find the letter was misleading because 2 Fernandez-Lawson had already rejected NGIC’s counteroffer, dated April 12, 2018, and 3 stated she would proceed to litigation “unhindered” by the policy limits; therefore, NGIC 4 was not attempting to settle the claim. Moreover, the claim file does not show any 5 attempts to resolve the claim between April 13, 2018 and June 26, 2018, when Ray 6 Kepple informed NGIC that Trenton Kepple was served with a complaint. (Dkt. No. 19- 7 4, Tuck Decl., Ex. 2 at 110-11.) Further, Plaintiffs argue that a jury could find that 8 NGIC’s rejection of the $15,000 policy limits demand even though it assessed the full 9 value range to be $14,596.04 on April 11, 2018 could be deemed as malice or oppression 10 towards Kepple. (Dkt. No. 24 at 35.) 11 In viewing the evidence in the light most favorable to Plaintiffs, the Court 12 concludes that there is a genuine issue of material fact as to whether NGIC’s conduct 13 constituted oppression, malice or fraud. See Hughes, 215 Cal. App. 3d at 847 (upholding 14 award of punitive damages where denial of insurance claim was “product of . . . 15 fragmentary medical records, a cursory review of the records, . . . [a] disclaimer of any 16 obligation to investigate, [and] the use of a standard . . . at variance with community 17 standards”). Accordingly, the Court DENIES Defendant’s motion for summary judgment 18 on punitive damages. 19 Conclusion 20 Based on the reasoning above, the Court GRANTS in part and DENIES in 21 Plaintiffs’ motion for partial summary judgment. Specifically, the Court GRANTS the 22 motion on the on the first (Fernandez-Lawson as assignee), and sixth (Trenton Kepple as 23 an individual) claims for breach of the implied covenant of good faith and fair dealing 24 and DENIES the fourth claim for breach of the implied covenant of good faith and fair 25 dealing sought by Fernandez-Lawson, as judgment creditor. 26 The Court also GRANTS in part and DENIES in part Defendant’s motion for 27 partial summary judgment. Specifically, the Court DENIES the motion on the first, 28 fourth, and sixth claims for breach of the implied covenant of good faith and fair dealing; 1 ||} GRANTS Defendant’s motion for summary judgment on the second claim for breach of 2 contract by Fernandez-Lawson, as assignee, and DENIES summary judgment on the fifth 3 claim for breach of contract by Fernandez-Lawson, as judgment creditor; the third claim 4 direct action for recovery of judgment by Fernandez-Lawson; and the claim for 5 || punitive damages. The hearing date set on May 10, 2024 shall be vacated. 6 IT IS SO ORDERED. 7 ||Dated: May 7, 2024 8 Hon. athe Cae 9 United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28